Private student loans originate from non-government lenders and work differently than Federal loans

Federal student loan interest rates are set by the government and in most cases, do NOT take into consideration your individual situation. Every borrower receives the same deal. It makes no difference whether you are a millionaire or flat out broke. Some needs or profession based federal loans are the exception as they consider only a small set of facts for qualification and typically offer a rate break over normal federal loans.

If the government is not subsidizing the program (aka picking up some of the tab), the available interest rate should be higher than the best market rates available, but lower than the worst.

Private Student Loan Interest Rates

The interest rates are set by the lender based on your specific situation and the products they have available. If you have fantastic credit, no debt and high income, you should receive the lender’s best interest rate option.

The interest rates on private loans are all over the place. We have seen loans with interest rates from as low as 2% all the way up to more than 20%!

Variable vs. Fixed Rates

Federal and private medical school loans can be fixed or variable. Federal loans that were originated before 2006 were variable rate only. From 2006 until now, the rates on new federal student loans are fixed.

Fixed Rates

Fixed rates are pretty simple. The interest rates are fixed for the life of the loan and are independent of the repayment method and economic conditions.